Charitable Lead Annuity Trust

A charitable lead annuity trust (CLAT) is a charitable annuity setup directly through an insurance company, or a similar organization, regularly engaged in the business of issuing annuity contracts. The donor makes an initial deposit to the CRAT and the charity receives the fixed annual income steam for a fixed number of years. At the end of the term of the trust, the donor’s beneficiary will receive the remaining interest.

Characteristics of a CLAT:

Fixed annuity stream to a charity, fixed percentage.

Initial deposit is only allowed.

Effectively removes assets from the estate of the grantor.

At the end of the term, remainder interest is paid to a non-charitable beneficiary.

The donor receives an income tax deduction on FMV of the property transferred.

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